Story Highlights• NEW: Hamas leader says his party will continue governing
• NEW: Ismail Haniya rejects separate Palestinian states in Gaza, West Bank
• NEW: Israel warns against creation of Islamic "Hamastan" state
• Palestinian President Abbas of Fatah dissolves unity government
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GAZA CITY (CNN) -- Fighters from the Hamas party claimed full control of Palestinian Authority security agencies in Gaza late Thursday. Its leader rejected an emergency decree from President Mahmoud Abbas dissolving the Hamas-led Palestinian unity government.
The emergency decree dismissed Prime Minister Ismail Haniya and announced that an interim government staffed by Abbas' Fatah party would be created.
The president vowed to hold new elections "as soon as the situation on the ground permits," Abbas adviser Tayeb Abdel Rahim said.
But Haniya, whose militant Islamic party won control of the Palestinian parliament in 2006, rejected the "hasty" decree and said his government would remain in office.
"Our presence in the government came about from democratic and popular will and through the ballot boxes," he said in a late-night speech. "We restate that we will continue to follow democratic conduct and respect the political system and all of its components which came through the elections."
After four days of intense fighting that left at least 70 Palestinians dead, Hamas fighters waved their green banners atop the headquarters of the Preventive Security Service in Gaza City and took numerous prisoners. (Watch how Hamas crushed Fatah)
By midnight, the Islamic movement -- which the United States, Israel and the European Union consider a terrorist organization -- claimed control over Gaza City's presidential compound, Palestinian security sources said.
Rahim declared the situation "a military coup attempt." And Palestinian legislator Saeb Erakat, an Abbas ally, told CNN that Gaza "is now officially out of our control as the Palestinian Authority."
Haniya urged an end to the fighting and said his government would move quickly to restore order in Gaza, already battered by weeks of factional clashes between Hamas and Fatah. And he tried to ease concerns about the split in the Palestinian Authority, vowing not to separate Gaza from the remaining Palestinian territory in the West Bank.
"The Gaza Strip is an integral part of the Palestinian land, and our people in the strip are an integral part of our people the world over," he said. "We refuse the existence of a Palestinian state in the strip alone. The country is one and cannot be divided."
A Hamas representative in Lebanon, Osama Hamdan, told CNN that Hamas had to rein in rogue Fatah commanders in the security forces who had created fiefdoms in Gaza.
"Someone has to control the situation and bring them to the law," he said. (Watch: Hamas spokesman Osama Hamdan speaks to CNN )
Hamas fighters ransacked captured installations Thursday and led away shirtless Fatah prisoners. Their fates were unknown late Thursday, but Hamdan denied reports that Fatah captives were being executed in the streets.
Abbas and the rest of the Palestinian Authority leadership are based in Ramallah, in the West Bank. But the collapse of the Fatah-controlled Palestinian security forces in Gaza raised questions in Israel, the United States and the surrounding Arab region about the future of any settlement of the decades-old Israeli-Palestinian conflict.
Hamas and Fatah formed a unity government in February in an effort to stop periodic street battles and restart international funding, particularly from the United States and the European Union. Direct funding was cut off after Hamas refused to renounce violence and recognize Israel's right to exist.
Islamic law could be imposed
A Hamas spokesman in Gaza, Fouzi Barhoum, said earlier that Hamas was imposing Islamic law in Gaza. But speaking from Damascus, Syria, exiled Hamas political leader Khaled Meshaal denied the movement would place the territory under religious law.
Israeli Foreign Ministry spokesman Mark Regev told CNN that Israel was concerned that Gaza would become a "Taliban-like" Islamic stronghold. But he insisted that it would keep channels open to moderate leaders such as Abbas "who believe in peace."
In Washington, Secretary of State Condoleezza Rice said the United States stands behind Abbas, whom it has supplied with about $60 million in security assistance.
"He was elected in 2005 by a large margin," Rice said. "We fully support him in trying to end this crisis for the Palestinian people and give them an opportunity for a return to peace and a better future."
Israel has viewed the fighting with alarm, calling for an international force to patrol the Egypt-Gaza border to prevent new and more powerful armaments from being smuggled in if Hamas gained control of the territory.
"The situation in Gaza is dangerous, and the danger is that Hamas will take over and turn Gaza into 'Hamastan' -- to a kingdom of thugs, murderers, terrorists, poverty and despair," said Ephraim Sneh, Israel's deputy defense minister. "That's the meaning of Hamas control over Gaza."
But Israel has tried to stay out of the fighting, considering it an internal Palestinian fight, Regev said.
The European Commission, the executive branch of the EU, announced Thursday that it is suspending $112 million in aid for the Palestinian territories and cut off all 16 of its relief projects in Gaza for the first time, due to the lack of security.
But Louis Michel, the European Commissioner for Development and Humanitarian Aid, said he hopes the projects "can resume very soon."
Copyright 2007 CNN. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.
Hamas gunmen plant a flag after seizing Fatah's Preventive Security headquarters.